ARTS Minister Estelle Morris made a positive U-turn last night and announced Liverpool will receive Government funding for its celebrations in 2008.

The MP (right) said she was currently in discussions over how much cash would be given to the city for its reign as European Capital of Culture.

A formal announcement of the amount is expected in the next two months.

The news contradicts an earlier statement made by Ms Morris in November, when she said there would be "no pot of money" for the year's events.

Visiting Liverpool yesterday for the Government's Big Conversation initiative, she said: "I would have loved to come here today and announce millions of pounds for Capital of Culture, but we are not ready to do it yet.

"I hope the contribution will be to help fund the plans for the year.

"I will be coming back to Liverpool in March and I hope that by that time I will be able to talk about this in more detail."

But Ms Morris warned the funding should not deter other organisations from making a financial contribution to the Capital of Culture year.

She said: "It is key that other people who have prised funding stay on board as well."

Capital of Culture organisers last night welcomed the change of policy.

Sir Bob Scott, Liverpool Culture Company's executive chairman, said: "We are delighted to hear the Government will be giving Liverpool funding for 2008.

"We will obviously be very keen to know how much."

A spokesman for Liverpool City Council said: "Liverpool will be representing the whole country as European Capital of Culture in 2008.

"The city council and its partners have already put together a subs tantial investment but we would welcome any support in providing additional resources to help the city stage a world class cultural year."

Last November, Ms Morris told Liverpool no Government cash would be available to help make its Capital of Culture year a success.

Her statement was met with anger by Merseyside MPs and the leaders of Liverpool's arts and community organisations who felt the city should be given the same treatment as Manchester and London who have both received large sums of Govern-ment money for large scale events.

Three years ago, ministers found #25m to bail out Manchester when planning for the Commonwealth Games was facing financial meltdown.

A rescue package provided #80m, of which Manchester City Council paid #25m, the Government #25m and Sport England #20m.

London's bid to host the 2012 Olympics has received #30m Government funding.

Coun Warren Bradley, Liverpool's executive member for leisure and culture, said the DCMS's change in policy followed lobbying in Parliament.

He said: "A lot of people felt that it was unfair for Liverpool to be ignored after the Commonwealth Games was given funding so this is really good news."

Liverpool will receive a token sum in euros from the European Commission for winning the Capital of Culture crown.

However, the city is expected to use the title to generate additional funding.

The British Government is not obliged by the EC to make any contribution to the year's events.